As far as we know, there is no kind of life inhabiting our moon or any kind of underworld.

[Notice that he's not saying they don't exist. They could totally exist! It's just that humanity isn't aware of them, which isn't exactly uncommon. He has faith in humans, but he also acknowledges that they're... not very smart.]

We have dwarves, or a concept called dwarves, but they exist only in fantasy. Dwarves are a common race in stories that introduce intelligent species other than humans.